Digging out of a Hole

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It’s a situation in desperate need of a turn- around specialist with a flair for cost- cutting. The project is billions of dollars over budget and the old boss just got the ax. Sounds like some E-commerce strategy gone woefully astray? No, it’s the massive underground public works project in Boston, dubbed the Big Dig, now estimated to total $13.6 billion by the time it’s done. The state’s former finance chief has been called in to fix the ultimate bricks-and-mortar problem.

Revelations that the Big Dig would cost $1.4 billion more than expected hurried the downfall of James Kerasiotes, the former chairman of the Massachusetts Turnpike Authority, the entity that oversees the Big Dig construction. Some tough-talking politicians on Capitol Hill threatened to withhold federal funds, which are supposed to total $8.5 billion by the time the Big Dig is completed in 2004. Amid the political heat, Gov. Paul Cellucci reached for his former administration and finance secretary, Andrew Natsios, to restore fiscal credibility to the project.

Natsios, a longtime Republican fiscal watchdog with a reputation for being tough with a buck, immediately called in auditors from Deloitte & Touche to get an independent opinion of the full extent of the overrun damage, which is now widely believed to be close to $1.9 billion. Natsios then helped create a plan to close the budget gap, reinstating state vehicle license fees and using state surplus money and cash reserves totaling $650 million to pay down high-interest debt, which freed up additional cash for the project.

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Although the project is 60 percent complete and almost 100 percent designed, Natsios says he is “looking for ways to save money, and finding more than I expected.” He is also looking for a CFO with experience at “a very large undertaking.” A key qualification: “The person has to understand politics in a state like this, or he’ll be eaten alive.”